Trump’s 50% steel tariff could see prices tank in Europe — and soar in the U.S.

U.S. President Donald Trump surprised markets yet again with an abrupt announcement on Friday that he will hike tariffs on steel imports from 25% to 50% on Wednesday.

But while the inflationary impact on U.S. domestic prices is widely expected to be severe, the effect in Europe will be more mixed, according to analysts — with some buyers and manufacturers able to benefit from lower prices.

“This was an absolute surprise. Already steel prices in the U.S. are higher than anywhere else, and it is a net importer which needs to have volumes coming in. All this does is raise prices there,” Josh Spoores, head of steel Americas analysis at CRU, told CNBC on Monday.

Canada and Mexico are the biggest exporters of steel to the U.S., with other major sources including Brazil, South Korea and Germany.

The latest tariff news could see steel redirected to other markets such as Europe, Spoores said, putting downward pressure on prices.

“Some manufacturers in Europe might do better building products that are steel intensive at home and exporting them to the U.S. as prices rise there,” he continued. “Automotives, construction products and appliances are all products that are going to feel the impact.”

He said that, in Europe, steel buyers are potentially winners.

But not all companies are expected to benefit.

Rella Suskin, equity analyst at Morningstar, noted in emailed comments that Germany’s BMW had separated out the expected impact of different tariffs in its 2024 results and flagged a negative effect — to the tune of “a high three-digit million amount” — from the existing 25% steel and aluminum duties.

BMW shares were 1.8% lower in early afternoon deals on Monday, with the wider European autos sector down 1.8%. Suskin continued that some of the impact of 50% tariffs would be offset for BMW by the recent loosening of autos restrictions by Trump, and also flagged the potential for a future deal between the White House and German automakers.

Danish wind energy developer Orsted could also be negatively impacted, Citi analysts led by Jenny Ping said in a note to clients, because it does not have a local offshore wind turbine supply chain in the U.S.